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Highlights
- Kraken CEO Jesse Powell said the company is working towards launching a NFT marketplace wherein the users can use them as collateral.
- NFT in 2021 has generated US$ 23 billion in trading volume, according to the data from DappRadar.
- Powell highlighted that the CryptoPunk NFT users could perhaps deposit it on Kraken platform and the exchange would showcase its value2 into the account.
Even though the non-fungible tokens (NFT) saw its debut in 2014, it was 2021 when it completely realized its full potential. Still considered to be in its nascent stage, the market for NFT in 2021 has generated US$ 23 billion in trading volume, according to the data from DappRadar.
Compared to 2021, the volume stood at US$100 million in 2020, thus showing the immense potential that NFTs hold, thus showing the immense potential that NFTs hold. Today, the NFTs are entering virtually every world be it be art, sports, games, music etc. But how about NFTs as collateral?
Kraken CEO Jesse Powell said that the company is working towards launching a NFT marketplace wherein the users can use them as collateral. Powell feels that the marketplace would offer a wide variety of options to the consumers to borrow funds and use the NFTs as collateral.
This could open an additional revenue stream for the firm, but also at the same time will open various options to the users who want to place their funds in NFTs and get funds equivalent to its value in their account.
How can NFTs be used as collateral?
Powell, in an interview with Bloomberg, highlighted that the CryptoPunk NFT users could perhaps deposit it on Kraken platform and the exchange would showcase its value on their account. Although still in the developmental stage, Kraken has already started the work to determine how to determine the liquidation value of the NFT deposited.
Kraken would be looking to buy art and support the artists and then would concentrate on making the functional uses of NFTs.
Currently, only NFTfi and crypto lender Nexo offer NFT-backed loans. If Kraken starts its own collateral services, it could well be the biggest exchange to venture into the space.
Challenges and competitors
Competitors such as Binance, FTX already have their respective marketplace with significant number of users. Another leading exchange is already signed for NFT space and could see them coming out soon. Kraken too has made its intentions clear, and the recent announcement could see them launch their own marketplace in 2022.
Adding a NFT marketplace would just extend the growing popularity of Kraken and with exchanges entering the NFT marketplace space, could also see competition get tougher for the likes of OpenSea.
The year 2022 is already being dubbed as the year of great movements within the cryptocurrency market. The NFT lending could well turn out to be a feather in the cap for Kraken.
